£200k a year income; PCP declined for £650 pm

SeanG79

A few points:

1. Funders are looking for stability, they wont like the fact you are moving every 1 - 2 years as a tenant.
2. The sabbatical and the fact you are now self-employed makes you a higher risk.
3. You are financially linked and have a default appearing now on your searches, lenders have different thresholds regarding adverse, for example if their acceptance is a default of <£100, it wont matter if your default is £300 or £300,000.
4. If your income is £200k a year and you have circa £8,500 disposable income a month (£650 being 7.5% of your monthly disposable income), why haven't you saved enough money to buy this car outright? As an underwriter, I would be concerned that you have so much income but are not a property owner, it all doesn't all add up.

Herzlos

You'd be much better off buying something for £10k outright now, and putting £650/month into savings to upgrade it in a couple of years with £15k + whatever your current £10k was worth by then.

If you're self employed you'll probably need to show ~3 years of stable accounts before they lend you £40k+

Clive_Woody

Get yourself a Skoda for now (seriously), cheaper to buy, cheaper running costs and very decent cars with a good range of toys and the vRS has a decent turn of pace.

My salary isn't quite up there with yours but certainly the premium German brands would be affordable for me, and the temptation has been there, but in the end I decided paying off my mortgage was a greater priority and to be honest I am very happy with my Octavia vRS and it's about half the price of a shiny new Merc.

Look at some of the tips on here for building a good credit history, certainly consider getting a cashback credit card, put all your day-to-day spending on it, set up a DD to pay it in full each month then at the end of the year collect your cash back (all the time showing lenders you can manage credit sensibly). I use an AMEX platinum card and get a very decent pay out each year.

Candyapple

fabiantony wrote: »

Financial Links
My other half and I are in fact financially linked. She used to have quite a fair amount of debt racked up, around £12k (shop cards, unsecured loans, various cc debt, overdraft, etc). Since 2 years ago we made every effort and paid off all of that debt in a few months.

All our accounts (debit, savings) are joined and have little-to-no debt since 18 months ago. The only negative factor in her accounts are a defaulted account (£300) around 4 years ago. While we can understand thats a bad thing, it seems crazy £300 could bring her and my score to its knees despite a high household income and lack of debt.

Oh you'd be surprised at the amount of damage a default can do.

Everyone else has made great points but I think you’ll find your partner’s default is going to the root cause of declines and poor scores. Until it has dropped off in 2 years’ time I wouldn’t bother trying to get any mainstream credit; be it or car finance, credit card or mortgage.

Given your income and lack of any immediate need for access to credit (can’t you buy a slightly cheaper car for the time being?) you should save for the next 2 years to build up your deposit and whilst you are doing that, apply for other subprime cards such as Aqua, Vanquis etc. and use them for small monthly purchases and set up a DD to clear the balance each month. Do this for at least a year and then close the cards. That way in 2 years’ time when the default drops off and you go for a mortgage, lenders will be able to see a positive credit history that has been built.

fabiantony

@jamesd

jamesd wrote: »

Are you really self-employed or are you an employee of your own service company or some agency? The difference can matter. Self-employed people are generally regarded as higher risk than employees.

Good question; Yes I am self-employed (1.7 years now) through my own company where I am sole director and with direct client contracts.

jamesd wrote: »

Your very low £800 credit limit could be a problem. Low limits can be taken to be a sign of a lack of trust while high limits can be taken to indicate good past conduct. Ironically a higher limit if available could improve your chances of getting other credit.

Now this confuses me.

So while I can completely appreciate that my current lines of credit amount to £800, I fail to understand why my historic credit line does not seem to be relevant - I had a £10k personal loan from my bank (see original post) which I paid early without issues. Does that not account for anything? and rather just whatever debt I am on today?

jamesd wrote: »

Your thought of using more credit cards is good but if just for credit record building stop at three.

Will definitely take your advice on this. What is the rule of thumb that one should aim to have available as credit before it becomes a negative factor?

jamesd wrote: »

Types of credit matter also, a low value personal loan would be helpful.

Great point. Will do,

@SeanG79

SeanG79 wrote: »

4. If your income is £200k a year and you have circa £8,500 disposable income a month (£650 being 7.5% of your monthly disposable income), why haven't you saved enough money to buy this car outright? As an underwriter, I would be concerned that you have so much income but are not a property owner, it all doesn't all add up.

Valid question. I'll explain the breakdown. Lets assume only my salary (£8500)

Historically I had borrowed a fair amount from my parents +15k which I had to pay back, as well as about +12k for my other half's debt. During my 'sabbatical' I actually tried a new startup venture (which failed miserably) and that set us back around 20k (plus no income for several months).

Taking that into consideration lets ignore everything "pre-sabbatical". Since coming back into work, this is how I manage my monthly cashflow;

Pension: -1500
Savings (house): -2000
Savings (wedding): -1000
Savings (holidays): -500
Savings (rainy fund): -500
Rent / Food / Bills / Entertainment / Etc: -3000

You can realise that it comes almost exactly to 8500 therefore no wiggle for the additional expense. Well there is a bit of a story to that too; Having both recently quit smoking (after 10 years) and having been heavy smokers, we are now not spending around £700 a month on tobacco - "Oh I know..."

Anyhoo, you can probably see where I'm coming from here - Its an emotional buy / pat on the back.

Now, by no means I am trying to desperately hack my way to being able to get the car, rather, the decline has been the trigger to encourage me to educate myself further about my and my partners risk ratings.

For the curious; what is probably going happen is that I keep my car and save to buy in one chunk (even tough its more psychologically expensive it that makes any sense)

@Herzlos

Herzlos wrote: »

If you're self employed you'll probably need to show ~3 years of stable accounts before they lend you £40k+

Good to know!

@Clive Woody

Clive_Woody wrote: »

Get yourself a Skoda for now (seriously), cheaper to buy, cheaper running costs and very decent cars with a good range of toys and the vRS has a decent turn of pace.

They are stealthy, ill tell you that!

@Candyapple

Candyapple wrote: »

Oh you'd be surprised at the amount of damage a default can do.

Live and learn i guess...

Candyapple wrote: »

Given your income and lack of any immediate need for access to credit (can’t you buy a slightly cheaper car for the time being?)

I actually won't buy the car, its not like I desperately need a car change, it was an emotional buy which will need to be put on hold for the time being

Candyapple

Congrats to you both on giving up smoking :T

You seem to have your head screwed on and heading in the right direction. Good luck with everything, you are certainly in an enviable position to change your future for the better.

Pixie5740

jamesd wrote: »

Neither credit scores from credit reference agencies nor the MSE checks are meaningless though some people dislike the credit reference agencies or their charged services so much that they lie to people by claiming that they are meaningless or random numbers. What they are is imperfect because their scores just use the information from the credit report, not the more complete information in an application for credit and the specific scorecard (the scoring rules) used by each lender. You'll also a steady stream of silly reports that say a person who is bankrupt or similar has a great score, perhaps because of missing data on a report or an address mismatch or bug. The trends over time are more likely to be of use than the single score.

Given that lenders don't use the scores and that Experian, Equifax and Call Credit don't lend money those scores are totally meaningless. Yes it's wise to check that the entries on your credit files are accurate but the scores...just a marketing tool, no more no less.

JJG

fabiantony wrote: »

Valid question. I'll explain the breakdown. Lets assume only my salary (£8500)

Historically I had borrowed a fair amount from my parents +15k which I had to pay back, as well as about +12k for my other half's debt. During my 'sabbatical' I actually tried a new startup venture (which failed miserably) and that set us back around 20k (plus no income for several months).

Taking that into consideration lets ignore everything "pre-sabbatical". Since coming back into work, this is how I manage my monthly cashflow;

Pension: -1500
Savings (house): -2000
Savings (wedding): -1000
Savings (holidays): -500
Savings (rainy fund): -500
Rent / Food / Bills / Entertainment / Etc: -3000

You can realise that it comes almost exactly to 8500 therefore no wiggle for the additional expense.

Well there is wiggle for additional expense. You're "saving" 5500 a month. What's the point in "saving" that amount of money, to then borrow at a ridiculous interest rate? And FYI 'disposable income' is income after all bills, obligations etc have been paid. It is not your salary after taxes.

somethingcorporate

£3k a month on rent/food/bills an entertainment is quite a high number.

What is your breakdown of this?

If you find you are splashing £2k a month on eating out/drinking there certainly would be wiggle room!

fabiantony

somethingcorporate wrote: »

£3k a month on rent/food/bills an entertainment is quite a high number.

What is your breakdown of this?

If you find you are splashing £2k a month on eating out/drinking there certainly would be wiggle room!

Granted there is wiggle room, i was just simplifying for arguments-sake.

Very rough estimate (and probably too aggressive) but should give you an idea;

Grocery shopping		 		£350 
Alcohol at home		 		£50 
Cigarettes & tobacco		 	£700 

Days out		 				£50
Eating out		 			£100
Going out for drinks		 	£30
Lunches & snacks		 		£150 
Takeaway coffees, etc		 	£100 

Petrol/diesel		 			£200
Car insurance		 			£200

Life insurance					£35
critical illness insurance			£20
health insurance				£70

New clothes 			 		£70 
Hairdressing		 			£70 
Eye care		 				£30 
Prescriptions & medicines		£40 

Rent						£1100
Contents insurance		 		£75 
Council tax		 			£150 
Electricity		 			£100 
Water		 				£50 
Mobile phones		 		£80 
Internet/broadband		 		£35
Cleaner						£120